Big Rig Man
Lawsuits
When we talk about lawsuits in these pages, it’s often a big company suing a competitor, or an unfortunate citizen - basically, a wealthy plaintiff taking advantage of the system to get its way. Other times it’s baby powder manufacturers and opioid kingpins and conspiracy theorists attempting to evade legal and financial liability by abusing the bankruptcy courts. Food lawsuits are the only nice treats we get, legally speaking.
Basically, if you’ve got enough money to hire lawyers to file lawsuits, the American legal system is happy to oblige. If you’re in charge of a large corporation and decide you want to, say, sue a small wine company or invalidate a taco trademark, you can get signoff from the board or whoever is in charge of such things, and have your day(s) in court.
There is another type of serial plaintiff with nearly unlimited funds and resources - politicians. Much of America’s system of laws and regulations is interpreted and enforced through state and federal lawsuits. This is, as we’ve seen recently, bad news when states can bring politically motivated lawsuits and ride them all the way to a friendly Supreme Court, whose wildly conflicted justices enshrine those culture war grievances into our legal code.
While some states (Texas, Florida) have AGs that spend much of their time litigating the latest Fox News outrage du jour so they can spend the rest of their time appearing on said channel, there are other Attorneys General who use their powers to crack down on companies and people violating actual laws. Sometimes, even the bad AGs join suits against companies like Facebook and Google and Amazon, which, fine, whatever gets the job done.
Problem is, when politicians have access to their own team of lawyers and no real check on their power to file lawsuits, abuse can occur. Ron DeSantis and the gang of cronies he’s installed in the upper echelons of Florida’s government have filed all sorts of lawsuits, often directly related to his efforts to run for president, badly. Florida’s staff attorneys are locked in a mortal struggle with Disney over the company’s mild criticism of anti-LGBTQ bills. Is it reasonable to get into a multimillion dollar squabble with a huge corporation with a rabid fan base because its CEO annoyed you? It is when you aren’t footing the bill!
Also, if you have a governor who’s running for president and you’re a loyal foot soldier, you might file a bunch of lawsuits against the federal government to defend whatever crazy policies he’s put in place from the campaign trail. Whether said policies and laws are legal is irrelevant, because it’s political theater, and, again, you’ve got staff lawyers to keep busy.
If, on the other hand, you’re a wildly corrupt AG who avoided an impeachment conviction but is still facing a raft of other allegations, you could use your office to file criminal complaints against the people who impeached you. Sure, you’re still entangled in multiple criminal investigations and a whistleblower lawsuit by your own former attorneys, but you’ve got different attorneys still under your employ who can keep filing whatever lawsuits you want, as long as the state of Texas provides the funds to do so.
Politicians, then, as long as they remain in office, can operate with near impunity - only the voters or term limits can clip their wings, and incumbency in this country is a hell of a drug. For the targets of their lawsuits, however, the situation is entirely different.
Andrew Cuomo resigned in 2021 after being accused of harassment by at least eleven women. Since then, he and some of his senior staff have gone on a legal rampage against his accusers, dragging them into very public litigation and seeking to gain access to their personal communications. This intimidation and smear campaign against women brave enough to accuse a powerful politician would be reprehensible in and of itself, but wait till you find out who’s paying for it:
In fact, few of these women have the money to litigate this. Boylan has racked up $600,000 in legal bills. Most of the women being subpoenaed are young; some are state employees, civil servants. They do not have the resources to protect themselves legally. Meanwhile, the state has indemnified the former governor and his former secretary, meaning it is footing their legal bills. Cuomo’s are now over $6.6 million, while [Melissa] DeRosa has so far charged New York taxpayers $1.3 million.
That’s right, the state of New York decided that because Cuomo harassed and assaulted female staffers while governor, it would fund his multimillion dollar campaign to further harass and ruin the lives of said staffers. Extremely fucking cool!
Those of us with functioning shame glands may look at politicians and wonder why anyone would want such a lousy job. You’re thrust into the public spotlight, forced to attend endless streams of ceremonies and events, and consigned to begging for money from whichever local car or jet ski dealer you haven’t already milked dry. But! You may also be able to coopt the legal system to punish your enemies. In America, that’s real power.
Taxes
In addition to having unfettered access to legal resources, being rich in America relegates taxes from a necessary evil to more of a vibe. The wealthy pay armies of different sorts of attorneys to take advantage of every possible loophole in the tax code. Despite this, many rich people still don’t pay the insignificant amounts they do owe relative to their earnings.
The IRS was given a boost to its enforcement budget recently, and this week it announced that things are going great:
The IRS has brought in $160 million in back taxes from wealthy taxpayers, amid a recent push to crack down on top income earners.
The agency said Friday that it had collected $122 million from 100 taxpayers, on top of the $38 million it collected from more than 175 other high-income earners earlier this year.
The 100 taxpayers resulting in the latest haul are just a portion of the 1,600 individuals that the IRS is currently contacting for hundreds of millions of dollars in back taxes, according to the agency.
Excellent. Hopefully these raids and enforcement actions have a chilling effect on the elite classes who display open and flagrant disregard for following the rules. We all pay taxes because it is a social agreement we signed up for - even though the government doesn’t technically need tax dollars to fund itself, it is both a hedge against inflation and a statement of belief in fairness. The idea we should each return a proportionate amount to the state to pay for things like roads and bridges and uh, I guess tanks and missiles.
When a separate set of rules exists for the people who benefit the most from a society, things start to break down. The lines blur, the societal compact gets fuzzy around the edges. What would that look like, hypothetically?
The year is 1999. You’re a Supreme Court justice and you’ve decided you’d like to enjoy the highways and byways of America’s beautiful heartland from behind the wheel of a new recreational vehicle. What are your options? You could get a loan, sure, but RVs generally require a lot of money down because they aren’t treated like passenger cars. It’s a luxury vehicle, and you’re just a humble civil servant.
Lucky for you, a friend says they’ll give you a good deal on a loan. Such a good deal, in fact, that you can just pay the interest for a few years. And then, awhile later, they might just write the loan off entirely:
But despite the favorable nature of the 1999 loan and a lengthy extension to make good on his obligations, Justice Thomas failed to repay a “significant portion” — or perhaps any — of the $267,230 principal, according to a new report by Democratic members of the Senate Finance Committee. Nearly nine years later, after Justice Thomas had made an unclear number of the interest payments, the outstanding debt was forgiven, an outcome with ethical and potential tax consequences for the justice.
There are two explanations for what happened with this ‘loan’. One is that the loan was actually a bribe, and Thomas never expected to pay any of it back, just like he did not expect to pay back any of the private flights, yacht rides, or lavish vacations he’s enjoyed for the last twenty-plus years.
The second explanation, which is far more likely, is that Welters and perhaps Thomas did not pay some or all of the taxes for the RV, which is tax fraud. There are a dozen different ways they could have structured the deal to muddle the finances and make it slightly more difficult for the IRS to spot, because in 2008 the IRS was far more allergic to auditing the wealthy than it is today.
Given what we know about Thomas’s personal ethics and propensity for accepting wildly advantageous financial deals it seems likely this deal was both a bribe and tax fraud. Will anything happen to Thomas or his sugar daddy? Doubtful.
Elsewhere in taxes and lawyers, Microsoft has said it will appeal a recent IRS decision that it owes an eye-watering $29 billion in taxes because it hid valuable assets and profits in a Puerto Rican tax shelter for a decade.
Cars
The California Department of Motor Vehicles on Tuesday suspended Cruise’s deployment and testing permits for its autonomous vehicles, effective immediately.
U.S. regulators are investigating General Motors’ Cruise autonomous vehicle division after receiving reports of incidents where vehicles may not have used proper caution around pedestrians in roadways.
Damn, that’s crazy. It’s almost as if regulators have finally decided to acknowledge the wealth of evidence that robotaxis are not only a major source of traffic congestion but actually pretty dangerous to anyone walking, biking, or putting out a fire nearby.
Despite California’s eventual reversal on the issue, Cruise taxis will continue to operate in other states (update: as of this morning, Cruise has ‘paused’ all operations via a LinkedIn post (???) and says it needs to rebuild public trust, which is rich coming from the company that took out full page ads in newspapers saying humans were bad drivers. Karma, etc.)
Speaking of wildly irresponsible car companies currently under federal investigation, our favorite CEO had himself a sad on Tesla’s latest earnings call:
Look, he’s got a lot of things going on, legal battles, custody battles for his kids now, but it doesn’t justify acting like Trump on Twitter stonewalling the SEC or the European Union, and quite frankly turning into a little baby on the earnings call.
Listen, I know it is not easy to balance posting incredibly cringe jokes on the website you wasted billions on whilst maintaining a healthy ketamine habit and boosting your personal army of bigots and scammers, but earnings calls are when you need bring your A Game.
Tesla is under investigation for, among other things, building a house for Musk with company funds, claiming (falsely) its cars drove themselves, lying about mileage estimates, and is now facing class action lawsuits for a data breach. Not great!
What concerns Wall Street the most - they don’t care about the stuff on his other platform - is that Musk’s shenanigans to buoy Tesla’s stock price might not be working. Tesla’s failure to release major model changes and Musk’s knee-jerk price cuts any time sales slow means the cars are not only boring but downright cheap, which doesn’t fuel the usual market optimism Tesla and Musk both need to keep themselves above water.
FTX
It has been an interesting week for news about FTX, the collapsed crypto exchange. Its founder, SBF, has announced he will take the stand in his own defense, a sign his attorneys think he’s screwed or a gambit to get more Adderall.
Elsewhere, the FTX brand does not appear to have been completely tarnished by the appropriation and theft of billions in customer funds, because companies are bidding on it?
Options include selling the entire exchange, including a valuable list of more than 9 million customers, or bringing in a partner to help restart the exchange, Cofsky told US Bankruptcy Judge John Dorsey. FTX is also mulling a reboot of the trading platform on its own, he said.
You know what? Sure, why not. If there is anything consistent in crypto, it is the unwavering belief that even if you got caught up in the last exit scam or rug pull, you can make it back on the next can’t-miss scheme. I wish all nine million of FTX’s loyal customers best of luck in their future crypto trading.
Short Cons
The Markup - “Twitter is now slowing down traffic on links to the crowdfunding site Patreon, WhatsApp, and at times, Meta’s Messenger app, a Markup analysis confirms.”
CNBC - “In its third-quarter earnings report Wednesday, Meta revealed that its Reality Labs unit, which develops metaverse-related technologies, recorded a $3.74 billion operating loss.”
NY Mag - “Every founder tells themselves a story about why they’re heading to the gold rush, but the executive coach I would eventually hire says there are really only two. Do you want to be rich, generating wealth in service of some further end? Or do you want to be king, with money a mere byproduct of trying to make the world the way you feel it should be?”
Bloomberg - “Chemical company Monsanto Co. has agreed not to exclude non-US citizens from future settlement agreements related to allegations that the herbicide Roundup exposed farmworkers to cancer.”
CNBC - “When he opened the laptop, law enforcement could see his bitcoin wallet. “Lo and behold, he had $60 or $70 million worth of bitcoins right there next to us,” MaGruder told CNBC in an interview.”
NYT - “Three hundred Cameo employees danced, took videos and basked in their good fortune to be a part of the Cameo “Fameo” — the company’s nickname for its employees and community of celebrities. They were on a rocket ship powered by D-list celebrities and pandemic loneliness.”
Prospect - “The interesting thing about S Market, and what brought me all the way to Finland, is not this bog-standard grocery store. It’s the parent entity S Group, a cooperative network owned by its members—and one of the biggest and most successful companies in Finland.”
HuffPost - “A former Florida state representative who sponsored a controversial “Don’t Say Gay” bill in his state has been sentenced to four months in federal prison after pleading guilty to fraudulently acquiring $150,000 in COVID-19 relief funds.”
Responsible Statecraft - “As the home to countless government agencies, Washington DC’s population is dense with people whose choices at work can affect the entire world. This has made the capital metro system a magnet for government contractors and other advertisers looking to shape policymakers’ activities.”
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